Tax Deduction of the Week: Business Travel & Meals

Earlier in the week the Roni Deutch Tax Center – Tax Help Blog posted a new entry in their deduction of the week series. The new article explains the travel and meal deductions available for business owners and self-employed taxpayers. You can find an excerpt of the entry below, or click here to sign up to the Tax Help Blog RSS feed.

Travel Expenses = Fully Deductible

All travel expenses that you incur as a small-business owner are tax deductible. This includes the cost of travel (plane fare, train tickets, etc.) as well as hotel charges, rental cars, taxi fares, tipping the bellboy, and even dry cleaning fees while traveling.

Food & Meals

As with typical meal and entertainment deductions, you can only write off 50% of your meal expenses. However, when you are traveling for business you do not need to be entertaining a client in order to claim the deduction. You can deduct the 50% of all food purchased, including room service, fast food, and even meals from expensive restaurants.

IRS Regulations

According to the IRS, “you cannot deduct expenses that are lavish or extravagant or that are for personal purposes.” Additionally in order to qualify as a travel deduction you must be “away from the general area of your home for a period substantially longer than an ordinary day's work.”

Claiming the Deduction

You can claim business travel and meal expenses on IRS Form 1040, Schedule A.

Which Travel Expenses Are Safe To Deduct on Your Taxes?

There are a lot of expenses that business owners can deduct from their taxable income but it is difficult trying to stay on top of all the IRS’ rules for self employed taxpayers. One of the most confusing expenses are travel expenses. If you own a small business chances are you've got enough to think about. That’s why I’m here! I recently read an article in USA Today. USA Today did a good job putting together a helpful article explaining which travel expenses are safe to deduct and which are not.

The deadline to file taxes is just around the corner and knowing what business travel and entertainment expenses you can and can't deduct is critical so you don't pay the IRS more than you should or lose a legitimate write-off because you can't document it or risk an audit because your expenses went overboard.

"I always tell people, for taxes, it's the difference between what you earn and what you keep," says Barbara Weltman, a tax expert who advises small businesses. "You could earn a significant amount of money, but if you don't take legitimate deductions, then you're paying more taxes then you need to."

The truth is, you can write off everything from that suit you had dry cleaned on a business trip to the fax you sent from the hotel, as long as you have the records to back it up.

"Record keeping is so crucial," says Frank Degen, an agent licensed by the IRS to work with taxpayers and who is based in Setauket, N.Y. "You need to have records of the four 'P's' and a 'D,' and the four 'P's' are the person, the place, the purpose and the price, and the 'D' is the date. That's an easy way for business owners or self-employed people to remember what they need to do."

Continue reading at USA Today.com…

Congress's Spending on Taxpayer-Funded Trips Rises Tenfold

According to a new analysis from the Wall Street Journal, the amount of money U.S. Senators and members of the House of Representatives has increased drastically over the past decade. The findings have many Americans concerned, wondering why Congress is excessively spending taxpayer money while the rest of the country is struggling to make ends meet. Check out the data supporting the analysis below, courtesy of the Wall Street Journal.

The spending on overseas travel is up almost tenfold since 1995, and has nearly tripled since 2001, according to the Journal analysis of 60,000 travel records. Hundreds of lawmakers traveled overseas in 2008 at a cost of about $13 million. That's a 50% jump since Democrats took control of Congress two years ago.

The cost of so-called congressional delegations, known among lawmakers as "codels," has risen nearly 70% since 2005, when an influence-peddling scandal led to a ban on travel funded by lobbyists, according to the data.

The Journal analysis, based on information published in the Congressional Record, also shows that taxpayer-funded travel is a big and growing perk for lawmakers and their families. Some members of Congress have complained in recent months about chief executives of bailed-out banks, insurance companies and car makers who sponsored corporate trips to resorts or used corporate jets for their own travel.

Although complete travel records aren't yet available for 2009, it appears that such costs continue to rise. The Journal analysis shows that the government has picked up the tab for travel to destinations such as Jamaica, the Virgin Islands and Australia's Great Barrier Reef.

Palin Billed Taxpayers for Nights Spent at Home

From Washington Post.com:

Alaska Gov. Sarah Palin has billed taxpayers for 312 nights spent in her own home during her first 19 months in office, charging a "per diem" allowance intended to cover meals and incidental expenses while traveling on state business.

The governor also has charged the state for travel expenses to take her children on official out-of-town missions. And her husband, Todd, has billed the state for expenses and a daily allowance for trips he makes on official business for his wife.

Palin, who earns $125,000 a year, claimed and received $16,951 as her allowance, which officials say was permitted because her official "duty station" is Juneau, according to an analysis of her travel documents by The Washington Post.

The governor's daughters and husband charged the state $43,490 to travel, and many of the trips were between their house in Wasilla and Juneau, the capital city 600 miles away, the documents show.